California Warns Insurers Against Unfair Insurance Settlements

Just as shelter-in-place orders related to the coronavirus pandemic forced many businesses to shut down temporarily, California’s court systems have also been significantly limited. Currently, many types of case filings are not being accepted and cases that have already been filed have been postponed indefinitely. Even once the court system is able to get back to civil cases again, there will be a large backlog of cases to work through before new ones can be heard. 

Unfortunately, not only are insurance companies aware of these delays in the court system, they have been trying to use them to their advantage. Knowing that many of their policyholders urgently need extra money right now and that they can’t turn to the court system for help, some insurers have been making unfair, lowball settlements on claims or have been refusing to make settlement offers at all. 

In response, California Insurance Commissioner Ricardo Lara issued a notice on May 14, 2020 reminding insurers and others in the insurance industry that the California Unfair Practices Act prohibits certain practices. Some of the banned practices include, but are not limited to:

  • Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear
  • Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insureds, when the insureds have made claims for amounts reasonably similar to the amounts ultimately recovered
  • Failing to settle claims promptly, where liability has become apparent, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage

Those who are found to be in violation of the California Unfair Practices Act will be subject to civil penalties and Commissioner Lara will be using his authority to take action against insurance companies who are engaging in prohibited practices. 

If you’re a California business owner who needs help with a business interruption insurance claim, The Wallace Firm can help. Whether you’ve made a claim and been denied or you’re getting ready to make a claim, our lawyers can work with you to give you the best chance of success. We’re handling these cases on a contingency basis, meaning you won’t have to pay any fees unless you win. Contact us today to get started.